Financial Accounting Foundation Issues Inaugural Post-Implementation Review Report on FIN 48

By: Terri Polley
President and CEO
Financial Accounting Foundation

On January 12, the Financial Accounting Foundation issued its first “post-implementation review,” a report by an independent FAF team on the Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) (Accounting Standards Codification Topic 740, Income Taxes). The report now is available on our web site.
 
The post-implementation review (PIR) process is an important part of the FAF’s oversight responsibility and one way that the FAF is working to help improve the standard-setting process.
 
The PIR team’s review accomplished the objectives we set out for the PIR process: (1) to determine whether FIN 48 is accomplishing its stated purpose; (2) to evaluate FIN 48’s implementation and continuing compliance costs and related benefits; and (3) to provide recommendations to improve the FASB’s standard-setting process.  To maintain the FASB’s standard-setting independence, the PIR team does not make recommendations on standard-setting action.  
 
In the report, the post-implementation review team concluded that FIN 48, which was intended to increase relevance and comparability in reporting information about income tax uncertainties, achieves that purpose, generally. However, the report noted that some stakeholders have suggested that the standard could be improved. The FAF FIN 48 review team received input from investors and other financial statement users, preparers, accounting practitioners, academics, and financial regulators.
 
After additional review and consideration, the FASB will provide a timely response to the matters discussed in the report.  The FASB response will indicate whether further research or standard-setting action is appropriate.
 
In addition to the PIR report on FIN 48, we’ve also posted on our web site a second document that explains the history of and the rationale behind the PIR process –as well as the details of the process itself.